Banks Refuse To Open

Crisis Builds In Panama

March 4, 1988|By MIKE BILLINGTON, Staff Writer

PANAMA CITY -- Fearing a run that would liquidate their cash reserves, Panama`s 12 private banks refused to open their doors on Thursday on the fourth and final day of a nationwide general strike aimed at toppling the regime of Gen. Manuel Antonio Noriega.

The banks participated in the strike but had been scheduled to reopen their doors at noon Thursday.

``The situation is critical because, although our banks are still in excellent condition, if we open the doors the people would have put on a run that would have broke us,`` said a director of one of the private banks.

Speaking on condition of anonymity, the director said bankers met late Wednesday night to discuss opening for business.

``The decision was to open at noon today (Thursday). But at 9 a.m. today, they decided they could not do so and still be responsible bankers,`` the director said. ``We knew that if we opened the doors today that, within a few hours, people would draw all their money out.``

The action by the bankers came as the State Department in Washington certified to U.S. banks that they should make no deposits into accounts controlled by Panama`s de facto ruler, Gen. Noriega, because his government is not legal.

Other private bankers in Panama City, also speaking on condition of anonymity, said they were reluctant to open because they could not get a firm guarantee from Panama`s central bank, Banco Nacional, that it has sufficient reserves or liquidity to honor all checks.

At most, those bankers said, the central bank has reserves of only $32 million. That is not enough, they said, to even meet government payrolls, which run to $62 million a month.

Much of the reserve money Panama`s 12 private banks have is tied up in long- term certificates of deposit and other investment instruments. If they are forced to cash those CDs early, the banks would suffer a significant financial penalty.

``Besides, even if we got 100 percent, that still would not see us through the end of the week,`` the bank director said.

He said that Panamanians who have money in foreign banks are trying to withdraw it because stores that remained open during the strike refused to honor checks. That will force Panama`s 12 private banks to remain closed today, he said.

Opposition leaders called off the general strike Thursday evening but were nonetheless heartened by the news that banks would remain closed today.

``We proved our point, and the strike has been a great success. The country is paralyzed,`` said Pierre Leignadier, vice president of the Chamber of Commerce.

Leignadier said that, although some supermarkets and other stores along the upscale Via Espana opened for business on Thursday, they did not have many customers.

``You see, the stores have also refused to accept checks because they don`t know if they will be honored. They are demanding cash, but when your bank is closed and you can`t get cash, you can`t shop,`` he said.

``So, even though some stores broke the strike early, all they did was pay their employees and light bills. They made no money and might as well have remained closed.``

In Washington, the State Department said it had certified under U.S. law that the Panamanian ambassador in Washington, who is loyal to ousted Panamanian President Eric Arturo Delvalle, had authority over Panama`s assets in the United States.

``The effect of this is to ensure that Panamanian government funds in U.S. banks are not removed by the Noriega regime,`` department spokeswoman Phyllis Oakley said.

She said the certification under the Federal Reserve Board Act was considered advice to be passed along to commercial banks by the U.S. central bank.

Republic National Bank of New York has agreed to transfer its Panamanian funds to the Federal Reserve Bank.

And a New York federal judge on Thursday barred three more banks -- Banker`s Trust, Irving Trust and Marine Midland Bank -- from transferring funds to the Panamanian government.

On Tuesday, Delvalle, who is recognized as Panama`s president by the United States and most other nations, announced that he was setting up an escrow account and that all payments due Panama should be put into the account. Delvalle, who was ousted from office by Panama`s National Assembly last week after he tried to dismiss Noriega, remained in hiding on Thursday.

Although there was scattered skirmishing on Thursday, opposition members did not take to the streets, as they did on Tuesday and Wednesday to protest Noriega`s regime.

Riot police kept watch on the Via Argentina and near the church of Guadalupe throughout the day. The Via Argentina was the focus of street rallies and protests on Wednesday.

Meanwhile, ships continued to move through the Panama Canal despite five bomb threats and a series of clandestine radio broadcasts urging workers to walk off the job.